The US greenhouse vine vegetable industry

Adapting to increasing import competition and demand maturity

The US greenhouse industry makes up a thin slice of the tomato, cucumber, and bell pepper market pie. In recent years, Mexico has become a major force in US markets of these vegetables, not only in the open-field segment but also in the greenhouse segment.

The growth and composition of US consumers’ per capita availability of these vegetables also tells a story of plateaued demand and a slowing substitution from open-field to greenhouse products, with Mexican imports responsible for most of the growth.

Greenhouse premiums have increasingly come under pressure and are relatively low for tomatoes, signaling price sensitivity to supply expansion. The greenhouse industry’s market value growth has slowed down accordingly after doubling over the last decade.

Implications and Key Takeaways
Demand maturity and increased supply competition will likely drive more consolidation in the industry to achieve growth. New US entrants have to operate at a large enough scale and a high level of technology to compete in the marketplace.

US incumbents and new entrants would benefit from differentiating their businesses via the introduction of new varieties with improved attributes, branding, and using a marketing strategy to offer non-price benefits. They are also incentivized to diversify their crop mix, exploring other crops with higher growth potential.

Further, the US greenhouse industry might also benefit from adopting the Dutch and Canadian ‘hub’ model rather than remaining spatially fragmented.

Finally, forging alliances and marketing relationships with growers overseas would also aid businesses in leveraging the competitive advantages of various production regions, increasing the marketing window and reducing the cost of production.

Rabobank clients can download the full report on research.rabobank.com


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